Capcom has canceled the development of Mega Man Universe. It was announced though the game's official website. As for the reason behind the cancellation, we don't know.
The game was originally set for release this year on Xbox Live Arcade and the PlayStation Network, It would play like a 2D game similar to the classic Mega Man titles but with 3D graphics as well as character customization and level creator tools. Imagine Little Big Planet for Mega Man.
I'm saddened by this news because I was looking forward to seeing "horrible box art Mega Man" in action. Its like Capcom hates Mega Man ever since Inafune left.